MBA Dilemma

Harvard B-school grads no longer see the upside to investment banking


The MBA Dilemma

Harvard B-school grads shun investment banks “We say ‘congratulations.’ But we are thinking, ‘I’m sorry’” Ruined weekends, PowerPoint drudgery, and overnight shifts in Manhattan skyscrapers once were a point of pride for the Harvard Business School graduates who went to work at Wall Street banks. Now young stars boast about how lucrative and healthy their lives will be—elsewhere. “People used to brag and say, ‘Oh yeah, 21-hour days, seven days a week for eight months,’ that was a badge of honor,” says Kiran Gandhi, a member of this year’s graduating class. “The humble brag is now, ‘Oh yeah, I work 9 to 5, I get paid a ton of money, and I have a great life.’ It’s green juice from vats in the office and amazing organic iced coffee cold-brewed—the quality of life.”

“Being at somebody else’s beck and call, I think it grinds people down. It’s an extreme kind of long-hours, whatever-it-takes, no-boundaries kind of culture”

The allure of Silicon Valley, where hip startups are minting millionaires, is eclipsing that of investment banks, where average pay has shriveled since the financial crisis because of a revenue slump and regulatory pressure. The number of Harvard MBAs going to Wall Street banks may hit a low this year, even after Goldman Sachs and others adopted policies to make them more hospitable to recruits. In 2007, about 13 percent of the B-school’s graduates who got jobs went into investment banking or trading, according to the school’s reports. By last year that was about 5 percent.
A preliminary survey of 2015’s graduates shows only 4 percent intended to join a bank after getting degrees in May. Among the class’s Baker Scholars—a designation Harvard grants the top 5 percent of MBA recipients—only one of the 45 who answered the survey expressed interest. Those are the findings of Keima Ueno, who received his MBA from Harvard in May. As a student, he served as a peer mentor and wrote a blog on what life is like at the school. He used class data from a pre-commencement survey to figure out where the Baker Scholars wanted to work. He wasn’t surprised by the results. “When we hear that our classmates managed to acquire a position with an investment bank, we say ‘congratulations,’ ” he says. “But we are thinking, ‘I’m sorry to hear that.’ ”

Ueno knows a bit about Wall Street, having spent three years at Morgan Stanley’s investment bank before returning to school for an MBA.

Now he’s in Japan, running a startup Internet retailer and his family’s health-care business.
Technology companies have been luring more top graduates with the promise that they’ll not only make gobs of money but also have a happier life, according to students and recruiters. Last year, about 17 percent of Harvard’s business school graduates poured into the industry, up from 7 percent in 2007, its figures show.

Hiring trends have been similar at five other selective U.S. business schools that release such data—the Wharton School of the University of Pennsylvania, Stanford Graduate School of Business, Columbia Business School, MIT Sloan School of Management, and Kellogg School of Management at Northwestern University. The percentage of students going into investment banking dropped at each of the schools from 2007 to 2014.

Lifestyle concerns aren’t the only factor in the shift. New rules are forcing banks to curtail trading with their own money, pushing grads focused on investing into hedge funds and private equity firms. The tech boom is luring entrepreneurs seeking to strike it even richer.

Big banks have been fighting back, promising recruits more hours to sleep, the occasional day off, and reasonable deadlines. The effort, prompted by the 2013 death of a Bank of America intern, is driven in part by a fear that the brightest graduates no longer view investment banking as a sustainable career.

Schools don’t typically release statistics showing where graduates landed until autumn, and Harvard isn’t commenting on Ueno’s tallies. Kristen Fitzpatrick, managing director of the business school’s career and professional development office, says more students are thinking about banking because of the banks’ recent efforts. “The work has been appealing to a lot of people for a while,” she says. “It’s just that the lifestyle needed to get a little better.”

At Harvard, pressure on bank employees became a classroom topic. Students learn about real-life corporate dilemmas and debate strategies. “There are several case studies dealing with investment banks wherein students discuss the brutal work environment and incredibly out-of-whack work-life balance,” Ueno wrote in an e-mail. “The banks’ efforts—their success or lack thereof—to bring about change have not been discussed, but what is consistently highlighted is the dark side of investment banks.”

Representatives of top investment banks say they’re still drawing plenty of B-school grads. Goldman Sachs received more MBA applicants this year than last for its summer associate program, according to Leslie Shribman, a spokeswoman. “We continue to see strong interest in our programs from students at top MBA schools across the nation,” says John Yiannacopoulos, a spokesman for Bank of America.
Banks get a bad rap, says Scott Rostan, founder of Training the Street, which prepares entry-level analysts for work in the industry. “I think it’s ‘the grass is always greener,’ ” he says. “The lifestyle of any financial-services professional can be grueling,” and money management is “not necessarily night-and-day better” than investment banking. When his company surveyed 400 students graduating from MBA programs at more than two dozen campuses in May and June, banking was the top career choice. About 26 percent said they hope to join an investment bank, up from 22 percent last year. Still, buyout firms and hedge funds also gained, drawing 16 percent, up from 11 percent last year.

While conducting a study on recruiting, Matthew Bidwell, an associate professor of management at Wharton, found that Wharton graduates who became bankers later expressed the lowest job satisfaction, despite relatively high pay. Usually, higher pay and job satisfaction go hand in hand, he says. “Being at somebody else’s beck and call, I think it grinds people down,” Bidwell says. “It’s an extreme kind of long-hours, whatever-it-takes, no-boundaries kind of culture.”
Recent grad Gandhi, who played drums for M.I.A. on the rapper’s international tour during her first year at Harvard, says her father, who was an investment banker, never encouraged her to enter the field. She took a job at the music streaming service Spotify. “When I first met people at HBS and they had worked in a bank, I would pick up on them feeling like they were almost ashamed,” she says. “And maybe that wasn’t the case when my dad was there 25 years ago, when being at an investment bank meant you were a baller.”

The bottom line : As few as 4 percent of new Harvard MBAs may go to work for investment banks this year.

17% : Portion of last year’s Harvard MBAs who went to work for technology companies
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